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Horiemon spends his first night in a prison facility January 24, 2006

Posted by fukumimi in general, IT, Japan.
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Takafumi Horie aka “Horiemon”, CEO of Livedoor, a high profile Japanese “internet company”, has been arrested along with three other senior executives of his firm last night. This move was expected since Livedoor was raided last week on suspicion of securities law violations, but the speed of the arrest has taken most people by surprise in Japan, were typical investigations are protracted bureaucratic affairs. His lieutenants are said to have begun confessions which have implicated Horie.

A week since the raid, Livedoor stock is still in freefall, with sell orders outweighing buy orders by more than one thousand to one, having already lost approximately 75% of its market value in a week.

The media has portrayed Horie as a maverick who was waging battle against the old guard and entrenched establishments of Japanese business, something that has endeared him to younger generations in particular. He famously blamed the gerontocratic business climate as the source of all of Japan’s recent ills. He promoted himself as a revolutionary, and ran as an independent candidate in last year’s general elections with the implicit approval of Prime Minister Koizumi’s LDP, with both Secretary General Takebe and then Financial Services Minister Heizo Takenaka making appearances at his side during the election campaign. The LDP are vigorously distancing themselves from Horie now, saying he was not an officially endorsed candidate.

Since the raid, the local media has reveled in covering the investigation in minute detail, including most recently live helicopter coverage of his transportation from the Prosecutor’s Office to Tokyo detention center. This is the same media who courted Horie and gave him the exposure which made him a household name by inviting him to appear on game shows as well as news programs. They are complicit in letting Horiemon hype his empire and sucking in the masses.

Whilst the establishment who had been willing to go along with Horie due to his popularity with the masses have suddenly given him the cold shoulder, Horiemon’s popularity appears undiminished with his core following.

His popular blog has attracted literally thousands of comments of support from fans and well wishers since the news of the investigation broke. Indeed, many of his supporters appear incensed at what they perceive as an establishment endorsed purge. It will be interesting to see how these supporters face up to the fact of his arrest and almost inevitable conviction. The fact that he was targeted does not make change the fact that this appears to be a person who was willing to bend or break laws to get ahead.

Some even suggest that regardless of alleged criminal practices, they still support him because of the stance he took. Where would that take us? Replacement of one corrupt establishment corpus for another corrupt group who are no less likely to entrench themselves as the last lot. That hardly seems like progress. At least most of the current establishment are founded on institutions that actually grew by delivering real value to its constituents.

People who are willing to gloss over his alleged criminal activities need to get their priorities straight. Perhaps this is another sad symptom of an increasingly amoral, money worshipping society where the masses are ignorant and yet feel they are entitled to an opinion. The media also needs to think hard about the role they played in shaping the current state of society.

The timing of the raid has raised some eyebrows, as the raid occurred on the day before a House of Representatives committee hearing relating to a construction industry scandal, which has led to rumors that it was timed to deflect attention away from this hearing which featured an individual with alleged connections to influential LDP figures. Horie may have been sacrificed by the LDP for more long term relationships.

The other factor which is likely to have affected the timing of this raid were the economic indicators which are indicating that the Japanese economy has finally emerged from a long deflationary period. It is likely that there was a decision made that the Tokyo stock market has rallied sufficiently in the last six months to suggest that investor confidence was solid enough to take the investigation of a high profile company in its stride.

Regardless of these external factors, it boils down to the fact that Livedoor and its senior executives appear to have attempted to cheat the system. If these charged are proved to be true, they should be penalised to the best of the law’s ability.

The impact of the Livedoor raid on the stock market infrastructure has been more widely reported in the international press than the raid itself. This is probably correct in light of the relative importance of the issues, compared to an Enron or a Worldcom, the scale of Livedoor’s alleged financial impropriety itself is pretty small.

In a clear case of poor planning, the TSE computer system has not been able to cope with the increasing number of trades executed on the market due in a significant part to the increasing number of individual investors taking advantage of internet brokerages which offer a daily flat fee for day traders, a trend accelerated by the recovery in the stock market. The relative health of the stock market combined with the continued vanishingly low interest rates for savings deposited in banks has tempted many personal investors to invest in the stock market. The legion of individual investors are now a significant force in the market.

Herein lies another reason the Livedoor raid had such a profound impact on the market. As a result of the large number of the recent investors who are engaged in margin trading, a panic pull-out occurred quickly spreading to the whole stock market, even though there was no change in the fundamentals supporting the market as a whole. Given the significant net presence of personal investors on the market, their combined actions are likely to have caused sufficient downward pressure which triggered automatic stop losses and created a vicious circle eventually leading to suspension of all trading on the market shaking confidence in the market. Most of the market recovered the temporary losses by the end of the week, but some internet companies were still being punished by association.

Whilst market players are entitled to expect that companies are complying with legal and reporting requirements, personal investments are a matter of personal responsibility. It is unsound investment practice to be exposed to significant risk on a company which exhibited many signs of being rather less than the sum of its parts, let alone worth anything near what its stock price suggested.

It would seem that many have forgotten the painful lessons of the bubble economy of the late 80’s and early 90’s, when so many people speculated and lost. Complicit are the media who have been promoting the stock market trading as an easy investment channel to novices who were looking to move their savings into some vehicle which would promise to bring significant returns. Media outlets from TV, newspapers and magazines targeted at all kinds of readership have been promoting internet trading in a totally irresponsible fashion of late, replete with stories of individuals who have hit the jackpot. They make it sound so easy. I’m sure the advertising revenue didn’t hurt.

Taking an overt anti-establishment stance was clearly going to make Horie and his company a target for the establishment. When taking on powerful forces, you best make sure there are no skeletons in the closet which might come back to haunt you. It probably helps if you actually also had a company which was creating real value rather than just the illusion using an elaborate scheme of mergers and acquisitions, financial engineering and marketing.

If he was the revolutionary business genius that he and others claimed he was, he would not have engaged in questionable practices which actually recall the antics of a previous generation of corrupt businesses in a way which it seems did not take long for prosecutors to dissect and unravel.

This episode should be a lesson to anyone that thinks there is an easy shortcut to making riches.

Every one of us is a member of society, and we are all obliged to act in a socially responsible fashion. What that means is that citizens and consumers should vote with their feet. Do not use the services provided by morally and ethically irresponsible organisations. Do not use the services of organisations who associate themselves with problem organisations (eg advertisers, commerical partners) until such associations are severed. It is our responsibility to purge society of those that attempt to gain advantage by illegal or unethical means, to allow true innovators and revolutionaries their rightful glory.

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CSR と cSR January 18, 2006

Posted by fukumimi in Japan, Japanese.
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最近は嫌なニュースが多い。姉歯・ヒューザーにしても、ライブドアにしても。日本はどうなってしまったのだろう。(昔からあって、今は表面化するだけマシだという考え方もあるが)

倫理・道徳の感覚を失ってしまった金の亡者が氾濫しているようで哀しい。日本古来の武士道の美学はどこに行ってしまったのだろう。

上場企業がこんなにCSR(corporate social responsibility = 企業の社会的責任)を軽視している社会は長続きするわけがない。日本はこのまま衰退か。

一因はライブドアに象徴される原理的市場主義の蔓延である。
また、グローバライゼーションとか言って、グローバルスタンダードでもない米国の手法を悪い習慣も含めて見習っている輩もいる。

それでもって、立法・行政・司法のどれも時代の変化についていけず、新たな手法に翻弄されている感がある。

企業や行政に頼っていては、もはや駄目である。
そもそも市民運動というのはここずっと日本では鳴りを潜めていた。そろそろ復活の時ではないか。

市民一人ひとりが社会の健全化、発展に対して責任を持たなければならない。そこで最近citizen social responsibility(市民の社会的責任)やconsumer social responsibility(消費者の社会的責任)というフレーズが生まれた。

これもよくCSRと略されるが、ここで提言したい。我々一般市民はlittle peopleなので、cは小文字で表記しよう。これでCorporate Social Responsibilityとの差別化も出来るし。

cSRは小さいことから始められる。CSRが徹底されている会社を応援する。CSRが出来ていない会社は叩く。行政や政治家個人への対応も同様。

一人ひとりではたいした力は無いかもしれないが、集団を成せば大企業も行政も無視できない。

流行の話題で言えば、ライブドアが罪を犯したと明確になったら、一切関係を絶とう。司法プロセスを見届けるべきと言う意見も理解しますが、会社が突 然営業停止して、個人の貴重な財産が消えてしまう可能性はある。お金にしても、知的財産やデータにしても。このプロセスと司法プロセスとは連動しないのだ から、時期を見極める必要がある。
そもそもあそこには革新性のあるサービスなんて無いんだから、代替サービスはいくらでもある。小生はクリーンな企業を応援したい。(もともとライブドアは一切利用しておりませんが)

CSR+cSR = より良い社会の方程式

Livedoor’s run-in with the authorities January 18, 2006

Posted by fukumimi in general, Japan.
4 comments

Joi Ito on the Livedoor bust:

http://joi.ito.com/archives/2006/01/17/live_door_raided_last_night.html

Is Joi Ito claiming this was a “set-up”, in that the Livedoor management did not engage in activities contrary to securities laws? I think we would all like to see you back up that claim. I would agree the company was targetted by prosecutors, but if you draw attention to yourself in the vulgar manner that he did, and pick fights with the establishment, you are inviting the establishment to attempt to teach you a lesson.

The fact that Livedoor happened to position itself as a counterpoint to the establishment (more for financial, political and PR advantage than by the fact that it _really_ walked the walk of a better model of Japanese business – more like it aped the less appealing facets of US-style fundamentalist market capitalism as embodied by the dot.com fraudsters and others like Enron, Worldcom and a long list of other companies (thankfully considered passe by real progressive businesses) should not and cannot excuse breaking the law and attempting to manipulate the market.

Japanese prosecutors don’t do raids of public listed companies involving a dozen locations and a couple of hundred staff in front of TV cameras unless they are 99.9% sure that they can get a prosecution, so the couple of charges that were used to get the warrants (which indeed is a relatively difficult task in the Japanese system, which usually means the media and the suspected parties often get a head start) will surely stick. But the real goal is to unearth evidence of other criminal activities, directly involving the mothership (ie Livedoor, rather than Livedoor Marketing), and there are already reports that there is a strong suspicion on further counts (which were probably heavily suspected as well)

If Horie and company were really about creating a new and better business environment in Japan, they would not have engaged in trying to play the market  in the same fashion as countless “old Japan” companies have done. Further, the money-above-all-else style of business smacks of either Reagan/Thatcher or dot.com eras, and is hardly the model of progressive business strategy (although one might argue the dark ages have to be traversed before we reach the age of enlightenment). Surely new Japan has to be as much about legal compliance, corporate social responsibility and an adherence to ethical values
as it is about taking on parts of the establishment which require an overhaul and adopting more globally competitive practices.

Fraud on the scale which is being suggested needs to be dealt with in the harshest terms, and we need prosecutors (and judges) taking a hardline stance against white collar crime of this sort.

The maximum sentence for the breach of the securities code in question is a measly 5 years and the maximum fine an absolutely shocking \30M ($340k or thereabouts?). There are no doubt other companies who are engaged in similar activity, and ideally this case would be the tip of the iceberg, but somehow I suspect this will just be one (or a small number of) public execution(s) for show, and others will be allowed to go unpunished _as long as they don’t get any ideas about challenging authority_.

I fully agree that the establishment is well overdue for an overhaul, but g-d help us if Horiemon and his cohorts were our best bet.

Let’s face the facts, Livedoor may have been a pioneer of high profile aggressive business practices on a large scale, but it was hardly a innovative internet services company. Indeed, the lack of revenue from its portal business should give you a clear indication that the whole thing was just a big M&A play, with Livedoor adding little value to its acquisitions beyond its high profile brandname (and even that brandname was a double edged sword due to the inability of Horiemon to stay out of the media circus)

PS There were rumours in December that prosecutors were gearing up for a high profile hit. At the top of the list of prospects were apparently Livedoor and a high profile domestic PE fund who has been known to have dealings with Livedoor, both of whom have been bothering the establishment. Additionally, there are persistent rumours that the date of the raid was chosen to deflect attention from the Huser hearing in the Diet which the LDP probably suspected would lead to negative publicity for the ruling party and some prominent members (on the 16th there were reports that Shinzo Abe, the front runner for to replace Koizumi when he steps down in Sept, may be implicated in some way and Kosuke Ito who has prominently been linked to Huser is a faithful Koizumi soldier).

One bit of good news coming from this ordeal which has hit the markets hard this last couple of days. We won’t be seeing Horiemon anytime soon on TV outside the news, and his plans to release a CD of a band comprised of himself and some associates is likely to be shelved.

Japanese blog provider IPO confirmed for Feb 9th January 12, 2006

Posted by fukumimi in IPO, IT, Japan.
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Drecom (http://www.drecom.co.jp) have confirmed an IPO on the Tokyo Stock Exchange’s Mothers (market of the high-growth and emerging stocks).

Drecom is a Japanese company started in 2001 by a student at Kyoto University, and posted sales of approx USD2M and net earnings of approx USD0.48M in the year ending March 2005. For the current financial year, they project sales increasing by 189% to approx USD6M and net earnings to increase by 120% to approx USD1M.

Drecom provides B2C and C2C blog related services (blog software, blog asp, blog portal, blog tools, blog search, etc), and is the first pure BSP IPO in Japan.

The blog market is hot in Japan (as it is pretty much everywhere) and there are a whole host of BSPs in this space. However, with the recent strength in the stock market, and as the first pure play Blog related IPO to hit the market, it is likely that Drecom will have a very strong IPO. Only 640 shares up for grabs though. Expect this IPO to be heavily oversubscribed, and for the stock to be valued at a huge PER, something over three figures may not be unrealistic with the state of the current market.

The “alternative” Japanese markets (Mothers, JASDAQ, Hercules) may be a good potential exit candidate even for overseas companies, given the relatively lax listing requirements. There are already many overseas companies eyeing a Japanese IPO. As an alternative early liquidity event (vs trade sale/M&A) these markets should be given serious consideration. Japan’s stock markets are buoyed up by private investors moving their savings out of savings accounts which accrue virtually no interest and putting the money into the stock market, this trend is expected to be maintained in the next few years as a huge number of new post-war baby boomer retirees come onto the scene with plenty of savings and time to play the markets.

就学援助4年で4割増 January 8, 2006

Posted by fukumimi in Japanese.
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朝日新聞、1月3日付けの記事である。
http://www.asahi.com/edu/news/TKY200601020137.html

記事から:
「公立の小中学校で文房具代や給食費、修学旅行費などの援助を受ける児童・生徒の数が04年度までの4年間に4割近くも増え、受給率が4割を超える自治体 もあることが朝日新聞の調べで分かった。東京や大阪では4人に1人、全国平均でも1割強に上る。経済的な理由で子どもの学習環境が整いにくい家庭が増え、 地域的な偏りも目立っている。」

最近では株価上昇やデフレ脱却など、景気回復を謳うニュースがメディアでは多く取り上げられている。

事実、景気が上向きと取れる動きは多方面にある。
しかし、同時に貧富の格差は拡大しているのも事実である。

地方では過疎化で苦しんでいる地域も多い。今冬の大雪では年寄りの一人暮らしで屋根の除雪作業中の事故や、除雪が行われない結果の家屋の倒壊事故が多発している。適正な人口構成の地域社会であれば、このような状況も減るだろう。

都市部でも貧富・地域の差が拡大傾向にある。

上記の記事では、「市区町村別では東京都足立区が突出しており、93年度は15.8%だったのが、00年度に30%台に上昇、04年度には42.5%に達した。」とある。

テレビの中のトレンディードラマの東京像とはまったく違う東京があることは話は聞いたことがある人は多いだろう。でも、実際自分の目で見たことはあるだろうか。

日本にもスラム街と呼ぶに等しい地域があることをしっかり認識する必要がある。

山谷とか、あいりんとか、寿町とか。これらいわゆるドヤ街以外でも、町全体が非常に厳しい環境におかれている町は多くある。

今年は厳冬の影響もあり、非常に厳しい状況である。

ドヤ街に辿り着く人やホームレスになってしまう人を見て、「なぜ定職に着かないのか」などという人もいる。しかし、現在の日本の現況として、中高年 で、建設業や製造業をリストラされてしまった人には仕事が無いことや、一度踏み外して定住所が無くなると定住所が無いとの理由で定職に就けなくなってしま うこと、様々な理由で精神的な病や依存症に悩まされていてそれに精神が支配されてしまっている場合など、一度そこに辿り着くと容易に社会復帰出来ない状況 を理解しなければならない。

今も同じ東京に冬の寒さをしのぐために路上でドラム缶に焚き火を炊いて暖を取っている人が大勢いることを考えると、繁華街の煌びやかさやデパートの初売りの賑わいを見て、このギャップに胸が締め付けられる思いになる。

社会全体としてこの貧富差拡大の問題を考えていかなければならない。変わって行く経済構造に適合できなくなる中高年は増える一方である。

特に現在衰退産業に従事していたり、すでに失業している中高年には未来は厳しいものである。自分の親や叔父・叔母などと同世代の人(またはそれ以上 の高齢者)が厳しい状況におかれていると思うと、正直辛い。彼らの多くは日本の高度成長の後半を支えた功労者である。バブルに踊らされた人も多い。その 後、長い不況で用無しとして、捨てられた。

本当にバブル期の暴走とその後の破綻の責任者である大企業経営者や政治家、官僚は今でも大して苦労していない人がほとんどだろう。

当然若者の問題(ニート問題など)にも真剣に取り組まなければならない。でも、若者にはまだ体という資本がある。

すべての人に社会的弱者の問題を真剣に考える義務がある。

誰だって、いずれそのような状況になってしまう可能性があるのだから。

日本のITベンチャー企業及びメディアの姿勢 January 8, 2006

Posted by fukumimi in Japanese, VC.
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1月5日付の読売新聞に「RSS広告社」の田中 弦社長のインタビュー記事が載っている。
http://www.yomiuri.co.jp/net/interview/20051228nt04.htm

RSS広告社は名前のとおり、RSSフィードに広告を挿入する、インターネット広告事業を主に行う会社である。RSSフィードはウェブサイト広告に次ぐ、新たなインターネット広告の媒体として注目されている。

インタビュー内に、以下のとおり述べている:
「これまでの日本のネット事業は、海外の進んだ事例をうまく導入する「タイムマシン経営」が主でした。しかし我が社の事業は、参考にする対象すらありませ ん。ふつうは競合他社をまねたり、反面教師にしたりしながらやっていくものですが。今頑張れば、米国のビジネスを輸入するのではなく、世界初の商品やサー ビスを自分自身で作れるのです。」

田中社長の主張は、RSS広告社の事業は前例の無いものだということである。しかし、現実はどうか。RSSフィード内に広告を挿入する手法は Kanoodleなどに2002年頃から既に発表されており、2004年までには、(2005年度に日本に進出が発表された)Feedburner、 Pheedo、FeedsterなどがRSSフィード広告を展開しており、Googleも2004年にはRSSフィードへの広告挿入に関する特許申請を 行っている。

2004年末には米国において、RSSフィード広告モデルは確立されていたと断言して間違いないと思う。

では、2005年4月設立のRSS広告社の田中社長はインタビューにて上記のようなコメントが何故出来るのだろうか。

米国の現状を把握していなかったのか?
それとも認識しつつ、客観的事実とは異なる自社の誇大広告的発言をしたのだろうか?

VC業界ではベンチャー経営者(及びベンチャーへの出資者)は自分の会社に惚れ込んでいないといけないと言われる。それは間違い無いが、それと事実の歪曲は別問題であると小生は考える。

では、新聞記者が脚色してインタビュー記事をまとめたのか?(この可能性はまったくゼロとは言えない。残念ながら。)

読売新聞もいくらインタビュー記事といえども、(たとえこの発言が実際行われたと仮定しても)あまりにも歴史的事実と矛盾する発言をこの様に記事と していいものだろうか。メディアの責任を自覚してもらいたいものである。(日本のベンチャーでも世界をリードするビジネスを展開する企業があると信じたい のであろうが、もう少し調査をしてから記事にして頂きたいものである)

残念ながら、この様な記事は日本のメディアでは珍しくない。広告記事的な内容も多く、不透明なビジネス関係などもある。また、特に技術分野に関しては専門知識が不十分な記者も少なく無いようだ。

The global stage January 5, 2006

Posted by fukumimi in IT, Japan, VC.
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Japan is a small overpopulated island nation of approx. 127million inhabitants. Its population has cost competitive access to fixed-line and wireless broadband connectivity surpassing most other nations on the planet.

Fixed-line ADSL access is now available for the majority of the population at speeds of between 8 and 50Mbps (downlink) for $30-40/month, and 100Mbps FTTH for as low as $50/month.

Data services delivered to wireless devices (mobile phones) as a successful business model first took off in Japan with the sucess of NTT DoCoMo’s i-mode service. Product innovations and the structure of the market in the mobile phone industry led to Japan also being the first market to embrace ringtones and camera/videocamera phones.

Yet for some reason IT innovations coming out of Japan and competing visibly on the global stage have been far too few and far between.

There are several local companies which have IPO’d in Japan servicing the mobile phone content market, originally providing format optimized webpage content, many have embraced ringtones (and now streaming/downloading of audio files) and video (either packet streaming over the cellphone network or using terrestrial digital TV broadcasting) is picking up and will be big themes for 2006.

There are three technologies that spring to mind as models of different types of technology export from Japan.

(more…)

VC関連情報発信基地 January 1, 2006

Posted by fukumimi in Japanese, VC.
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仕事上関心のある海外のVC、IT、テクノロジー関連トピックを日本語で紹介していきたいと思います。まだまだ海外情報をタイムリーに日本語で発信 しているところが少なく、この情報格差が日本のベンチャーの国際競争力に多少なりと影響しているように感じており、職業柄ベンチャー支援を行っているので その延長線上の活動として位置づけております。

また、同時に、日本のトピックを英語で紹介していきます。情報提供大歓迎です。

日本でも先進的な活動を行っている人々がいることを世界に認識してもらうためには英語で日本の情報を発信する必要があります。しかし現状では上記の 海外情報の問題以上に国内情報の発信の場が少ないのが問題であると感じております。少しでもこの現状を改善できればと思い活動して行きたいと考えておりま す。